1. Most states don't tax you on the trade in allowance. so if your car is worth 10K and the sales tax is 6% your really getting $10K plus $600 in sales tax savings. If you sell your car outright you lose that savings so you need to sell it for $10,600 just to break even.
2. If your trade is something a dealer is going to sell on his lot, it gives you more room to haggle...but if it's a wholesale car, you might be better off selling it yourself.
10K? He has 2-3k equity in it, probably less if he trades it in. Even at 2,500 the tax savings would only be $150.00 and a dealer is going to give anyone much less than $150.00 off of street value.
If you only have that much equity I would sell it outright before trading it in.
What are you talking about? The equity he has in the car is absolutely irrelevant to the tax issue. (It certainly should affect the overall purchase decision, but IT DOES NOT AFFECT the tax issue). He could be monstrously upside down and you still get the benefit. Use this example:
Purchasing 2004 Snazzmobile XLT LXi: 25000 Trading 00 Blahmobile base: -10000 (worth 10000 on trade, owes 15000, who cares? Dealer is still giving him 10000) Negotiated discount: -3000
Final purchase price: 12000 Add tax: (5.5% in most of WI): +660 Add title and tag (if not transferred): + 63 Subtract rebate: -1000 Add Amount owed on current loan +15000
Final OTD: 26723
No matter how you slice it, as was pointed out, in this example, the buyer would need to get 10661 from Carmax (or anyone else) to offset the inherent pricing advantage of trading.
Looking at crew cab PU's. GMC, Ford, Titan. Seem to be in the 25 to 27 range that we can afford. Trade in is a 2000 Dakota Crew Cab, SLT, 77K, all the extras, good shape, mechanically very strong. NADA tells me trade in is 12,700. We owe 7k on it.
I would post your vehicle info in Real World Trade-In Values. Over there, Terry will be able to give you a reasonably accurate idea of what to expect from the dealer.
Armed with this info and what you expect to get the new vehicle down to (after you negotiate the price and rebates, etc), only YOU can decide how cash to throw in the deal, how much to finance, etc. If you have top-end credit, if get decent rate on the car loan, there isn't much difference between paying 4% on the borrowed 3K and giving up the 1% you're making in a savings account with the 3K sitting there. Personally, I would finance it, telling myself in 3 or 4 years, I'll still be paying 4% on the loan, but I'll probably be making more with that cash parked somewhere. But, it's only something you can decide.
As for trading vs selling to Carmax. See my example above. Find out what the dealer will give you for it and only sell it to Carmax if they give you (Dealer's offer + sales tax in your area). If your state doesn't allow the trade-in to reduce the taxable amount, then you just get as much as you can from whoever. But, if your state does what I showed in the example, DO NOT discount the value of the sales tax reduction. The dealer isn't likely in the business just to screw you. Your vehicle is worth what it's worth to the person buying it, no matter what KBB or Edmunds says. (Which is why you should go to Terry first).
BTW, not a dealer, not a salesperson, just a guy looking to give advice seasoned by what I've learned here. And finally, HAVE FUN! Getting a new vehicle should be exciting and fun, so don't go into it as though it's an adversarial battle.
Are you serious? I'm looking at my last vehicle purchase contract from April and, here in Georgia, it is done like this. It is the same in California also. (Using the numbers above except the payoff amount since he says he has 2-3k equity).
Purchase price: $25,000
Trade In: Trade in value: 10,000 Amount owed on trade in: -7,500 Net Trade In: -2,500
On the Titan, I love mine. My only gripe is the GVWR is low so we have to watch the tongue weight on the trailers we pull, other than that, its a great truck.
Its a matter of staying within the truck's GVWR for safety. The truck has a GVWR of 6499, loaded with all of us and our stuff the truck (on the weigh scales) is 5900 lbs, so that leaves 599 for tongue weight. Taking the 5900 lbs out of the 14,800 lb GCWR leaves 8900 for trailer weight, however, most trailers have a 10 to 15% tongue weight, so realistically we can only tow up to a 6000 lb GVWR trailer with the Titan. Believe me, you don't want to get into an accident and be over the GVWR of the truck or the GCWR, opens up all kinds of liability.
Good thing they make light travel trailers for SUV's and light duty pickups. We have 2 that we like, one has a dry tongue weight of 440 lbs and a GVWR of 6000 and the other has a dry tongue weight of 494 lbs and a GVWR of 6200 lbs. With either one of them we would still have to watch our loaded tongue weight like a hawk. Plus put on an equilizer hitch and anti-sway bars.
That is honestly the only thing I can be a little miffed about. The Ford F-150 has a GVWR of 7200 lbs so opens up a little more tongue weight.
The Titan is a great truck, but the 9300 lb towing capacity is a little deceiving since that's based on a stripped down truck, a 150 lb driver, and nothing else in the truck to achieve max tongue weight.
Good thing we bought it for the 90% of time we aren't towing, its a really nice truck for that. Towing we just have to be careful and make allowances, just like we would with any 1/2 ton truck.
Okay, that's how it's done in your state. I just bought a car in late April. The dealer overallowed on the trade to make the deal work (to the point where the trade-in he gave was close to what I owed). I will pull the contract and post later tonight the numbers. It works just like I posted.
The reason it works this way is trade-in is trade-in. The state doesn't care what you have to do to pay who you owe. All they know is in the example, you are buying the car for (25000-10000). The purchase price is 15000, that's what you need to come up with. How you payoff the car is irrelevant (again, at least here in WI).
I just pulled a contract from last car that I have in a file here at work. Here's what it looks like (it's a standard WI Motor Vehicle Purchase Contract):
1. Dealer Retail Price: 15050.00 2. Discount: 1794.00 3. Cash Price (1-2): 13256.00 4a. Owned Trade-In Allowance: 2500.00 4b. Positive Leased TIA 4c. Negative Leased TIA 5. Trade Difference (3-4a-4b+4c): 10756.00 6. Other: 0 7. Service Contract: 0 8. Subtotal (5+6+7): 10756.00 9. 5% Sales Tax on Subtotal: 537.80 10. 0.5% County Sales Tax on Sub: 53.78 11. 0.1% Brewers Stadium Tax (n/a): 12. Luxury Tax 13. Registration, Title, Fees on MV11: 42.50 14. Vehicle Warranty or Serv Contract: 0 15. Other 0 16. Balance Due to ________ on Trade: 0 (my loan was outside dealer--had I financed with them, this where the amount I owed on the trade would be) 17. Subtotal (8+9+10+11+12+12+14+15+16): 11390.08 18. Less Cash Down Payment on Order: 500.00 19. Mfr's Rebate: __Cash Back x Assigned:1500.00 20. Subtotal: 9390.08 21. Less Additional Cash Due: 0 22. Due on Delivery or Bal to Finance: 9390.08
Thus I take the #22 amt and add it to what I owed on the previous loan.
Here in MA, the money owed on the trade is below the line. Selling price - trade in = tax value. Below that, lein owed and fees are added in then deduct cash down. Bottom line is cash due/amount financed at delivery.
"green pea factory, screamer ad store - they go through 50-75% of their staff every month, the managers are walking on eggshells worried about getting whacked at any minute, etc. I worked at a place like that - Buz Post GMC/Pontiac/Isuzu in Arlington, TX - Hyundai and Kia both turned them down for franchise requests because their CSI scores were so horrible."
Cue talk radio - Long time reader, first time poster.
I know I'm replying to a three week old message, but...
Went to the Buz Post website out of curiosity. Guess what vehicles they now sell? That's right, Hyundai and Kia! Are there CSI scores better, are Hyundai and Kia desperate? Who knows.
I managed to find someone in some discussion post a link to a website that listed US auto sales by model. I can't remember when or in what discussion it was posted.
I have attempted to find that website again, but I can't. I HAVE managed to find many of the same wrong websites I found previously.
Do any of you car dealers or car afficianados know of such a website?
I went to autonews.com, autoweek.com, and wardsauto.com. Since they all have "auto" in the website, I was having a hard time remembering exactly where to go.
The website wasn't in my favorites and didn't show up on the 'recently visited' list in Opera. I had a production report .pdf from Ward's in my download directory, but that info is for North American production only.
I criticized one poster (specifically) because he was trying to criticize everyone about everything, yet used second grade grammar and spelling while trying to correct educated, experienced adults on things related to the car business - a subject he had no true concept of.
(Dang, ended a sentence with a preposition!)
Now, if you have something to dicuss that relates to the car business, I'll be glad to debate or discuss with you - otherwise, you'll have to talk to yourself.
Just checked WI law. Yes, you are right. Does anyone see how that doesn't make any sense at all? Who on earth wrote the law like that? Must be the car dealers who make money off of trade ins. If you purchase a car, you purchase a car. In that scenario you paid tax on $5,000 less than if you would have if you would have just sold the car yourself and paid in cash. If you paid cash once for a car, it would seem in WI, and then traded every year you could be purchasing 2 or 3 hundred thousand dollars of product but only paying taxes on the first product and then depreciation in value for all of the rest. That doesn't sound fiscally sound. On every other product we buy we pay taxes on the purchase price.
and didn't use much Texas slang, plus 10 years in the Air Force getting made fun of for my Southern language broke me of many habits...
Visiting home always brings shock - words like "upare" (up there), "ait" (alright) and others coming from the mouths of friends and relatives...
I've pretty much abandoned any slang or cool phrases, like "nuttier than a fruitcake", "happier than a pig in slop", or "stronger than three acres of green onions", unless the phrases add color to a formal situation - these common sense phrases/analogies go over big when I'm testifying in court in PA or New Jersey...
I have to say that was a bit difficult to follow. But, let's take it a step at a time.
"Just checked WI law. Yes, you are right."
Great. Happy to see that after indicating I LIVE in WI and posted an actual WI sales contract, you could confirm I was right. Anyway...
"Does anyone see how that doesn't make any sense at all?"
Honestly, only two situations would make sense to me. 1) The way it's done now. The auto sales business is wacky to begin with, so I can see what it gets special treatment. But, look at it this way (and it's what I've been saying all along). You buy x for 20000, trade in something worth 10000, the state looks at the increased value to you as 10000. If bought a 20000 dollar car with no trade-in, to the state you're walking out with increassd value of 20000. The amount owed on the vehicle is totally irrelevant. I simply can't see how it should factor in the calculation.
"In that scenario you paid tax on $5,000 less than if you would have if you would have just sold the car yourself and paid in cash."
Uh, no. I paid tax on $2500 less than I would have if I paid cash. I think you misread the number. The trade-in was valued at $2500, so I saved 5.5% of $2500.
"If you paid cash once for a car, it would seem in WI, and then traded every year you could be purchasing 2 or 3 hundred thousand dollars of product but only paying taxes on the first product and then depreciation in value for all of the rest."
This is where you really, really lost me. At first I didn't have a clue what you were talking about. Now, I think I figured out your point, but it doesn't make sense. Look at an example (totally hypothetical numbers). You keep mentioning the "paid in cash" thing. Do you mean bought Car 1 with no trade? Or bought without a loan? If you mean the latter, again, it has no bearing on the calculation.
Anwyay, my example:
Car 1 purchased for $20000, no trade-in. Pay tax on $20000. Car 2 purchased for $22000, trade in Car 1 for $12000. Pay tax on $10000. (Makes sense, since the "gain valued", so to speak is $10000). Car 3 purchased for $25000, car 2 traded for $12000, pay tax on $13000.
In any scenario, regardless of if I owe money on the car, I always pay tax on the difference, the gain I received. It makes sense to me.
As I said, the only other viable alternative is not allowing the trade value to be deducted from the taxed amount. The state, however, has decided, from a public policy standpoint, that you are trading in something of value and should pay tax on what you get back. It is fiscally sound, because you have to pay tax on every car sales transaction. I like to relate a story of my own to describe how the state never misses a chance to tax a car sale.
I buy the car described in the contract above. A very good friend uses a Chrysler green sheet to buy the car. Chrysler requires the car to be titled in his name only. The loan for the car is in my name and he is a co-signer. The lender never complains about it being in his name only, probably because WI is a title-holding state (the owner physically has the title, regardless of whether there is a lien). I refinance the loan to one in my name only and since the car technically didn't change ownership and I didn't want to pay the tax, I simply added my name to the title and left my friend's name on it. Didn't work. They picked up on it and charged me tax on 50% of the refinanced amount (that's how they determined value and that I gain 50% of that by adding my name--had I put it in my name only, I would have owed 100% of the tax on the refi'd amount). I thoroughly explained the situation to the state, but to them, it was a transfer of ownership and thus, it needed to be taxed, when in "reality", there was not one thing different after the re-titling than before. The state charges tax on the transfer of ownership to ANYONE, other than a spouse. I sell my car to my kid, tax is owed on the value. Good luck telling them you sold it for $1 or for nothing "cause he's my kid". The state will use a valuation service, set a value on the car and charge tax on that, if they feel it's out of line.
Thus, if I sold my 01 Pontiac Sunfire for $3000 privtely (less than it's probably worth), the state would let it slide, figuring I had to dump it. But, if I said I sold it for $100, even with proof that I did, they would recalculate value and tax.
At least it gives the consumer a chance to make a deal with a private seller. Just try buying a high-dollar car in a state that gives credit for the trade. I looked at a car in Columbus that probably had a trade-in value of $29K, but couldn't even get it for $31K because he would lose the trade-in credit on the sales tax. It would have been a done deal in KY.
The states that have trade-in credit on the sales tax make it sound like a big consumer benefit, but it is mostly for the car dealers. They can pay $2K less for the car than you are willing to pay and the state subsidizes the deal. If it were really consumer oriented, every time you sold a car that was registered in-state, you would get a state tax credit that could be used to offset any deal on 30 days either side of the sale.
The state is incentivizing the individual to trade-in rather than sell privately. This usually ends up benefiting the dealer. My assumption is the state benefits by keeping more sales going through established sales channels, reducing the chances of fraud in regards to paying sales tax. Kentucky has solved that problem by charging sales tax on the NADA value of a used car, regardless of sales price.
I like the idea of a sales tax credit, but restricting it only to people that buy another car from a licensed dealer seems unfair.
"My assumption is the state benefits by keeping more sales going through established sales channels, reducing the chances of fraud in regards to paying sales tax."
I suspect this is the only TRUE reason for this provision. It makes it much harder to avoid tax on any car purchase since the dealer isn't likely to be as willing to "lie" about the sales price. The only problem with the sales tax is that it's transactional--it's designed to tax transactions, not value. I mean, technically, if I sold my big-screen TV to my neighbor, he is supposed to pay sales tax on that to the state. You can guess how often that occurs.
..... ** I like the idea of a sales tax credit, but restricting it only to people that buy another car from a licensed dealer seems unfair **
Whether it's fair enough I can't say .. but it's sure better than having states with no tax savings on trades, that stinks ... more and more states are going to the "Nada" value deal, which means if you sell your vehicle to your best "friend" or your nephew for $3,000 and the book "shows" $6,000 then thats what the tax is based on and they DO enforce it. 8/9 months later a little letter comes by the house and says: You Owe xxx .. the problem is, depending on the vehicle and the options, the hi-miler base vehicles get lumped in "about" the same tax amount ... Ooh, now thats fair .l.o.l...
if you can justify a lower value, like explaining body rust, broken transmission, excess miles, etc, they usually slide it through - the thing is, DMV is all privatized as far as collecting taxes and registration and issuing plates - weirdest thing I've ever seen -
The buyer and seller can jointly file an affidavit of the lower sale price and have the car appraised, and POSSIBLY get the value lowered. This is really only worth it on very high mileage, high priced cars, where the difference would be substantial. The additional benefit is having a lower value on which the personal property taxes are assessed.
On new cars, it is 6% sales tax on 90% of the MSRP. (or 5.4% of MSRP), with no trade-in credit.
However, even though this discourages frequent trading, it at least gives you a chance to buy a car from a private party at just a little more than they would get from trading it in, since there is no tax benefit. As I said before, trying to buy from a private party in a "tax-credit" state, means you have to beat the dealer by a couple thousand just for the seller to break even.
I will be turning in an Acura CL, 2001, in 3 months. It will have 24,000 miles on it. It does have some dings in the doors from people in parking lots hitting me.
It also has some paint on the front bumper where it *gently* tapped the garage one day. (Oops)
I took it to the paintless dent people and got two repair estimates, as well as a body shop. The body shop referred me to the paintless people; they said it was totally paintless repair, they wouldn't take my money.
My one estimate is for $540.00 for pulling out the dents and rubbing out the paint.
The second estimate is for $1500.00 for pulling the dents and repainting the areas. This *Magic* dent place felt they just couldn't do the job properly (and in good conscience) without repainting. (I must have worn my Stupid sticker on my forehead)
Anyway, my lease agreement says "the leasee is responsible for damage from any single event that would cost $500. Total below $500. AHFC will waive up to $1500 of excess wear and use for the total of these single events."
"A event is a single occurrence that results in damage to the vehicle. An event may result in damage to multiple areas of the vehicle (as in front and back, or both sides) but would be considered a single event for purposes of this addendum."
I don't know if I should get my car repaired or have the vehicle inspector out to look at it and debate it with him/her.
My car has to be turned in by December 1.
BTW, this Acura is on it's 3 transmission. It has been replaced twice at the dealership. The first time with 1400 miles on it and the last time 2 months ago, with 22,000 miles on it.
Any ideas or advice on how to handle this? I have leased every other auto I have had and never worried about minor dings. I have had GM and Fords. I did the same bumper routine with my last car and the Ford people didn't blink. They looked at it and had me sign and walk away. The bumper was scratched through to the plastic. This (On the Acura) can/will be buffed out.
I have read and heard horror stories about AFHC however and now I am really paranoid.
i would wait until someone from Honda inspects the vehicle. Theres no point spending money if they will waive the slight damage anyways. When i turned my Audi in, the inspection was good for 90 days and id imagine that most other lease inspections give you time to get things fixed if you need to, but going on your description i dont think they will give you trouble over the damage.
I had a Toyota lease where I thought I had some significant scratches, but was only charged $187.00.
By the way, you might be able to remove the garage paint transfer with some Meguiar's Cleaner Wax - the stuff works great - go over the area with some Wax Shop Super Glaze afterwards - I've removed LOTS of small paint transfers with those two products - I used to have a detail business.
I thought of trying an auto parts store for something like that and getting it detailed before the inspector comes out. If I can get the paint off the bumper and even try one of those dent doctor things myself, I figure why not?
I just wasn't sure if I should have the inspector see it with the dents or get it fixed.
I have had it serviced faithfully every 3500 miles (the light on the dash goes on and it won't go off til you take it in) and only at the dealer.
I have read pages and pages of Acura and Honda stuff here and there are some hair raising stories of lease turn-ins.
I may go get one more estimate to try to even the score between the two. That way if the inspector pushes, I'll be covered.
BTW, I love all these forums. I work from home and I have been avidly reading *everything*.
I have learned so much, I cannot believe it.
I went and test drove some cars this past week and took a photocopy of my license to give them. On it I wrote "No credit checks allowed Return to ___" The dealers were really surprised. They asked where I learned that *trick*. I said on Edmunds.com of course.
They were not happy, however, they photocopied that and did return it. Then told me it was illegal to do an unauthorized credit check. Which I knew, however, last time I car shopped, 3 years ago, I didn't know that and an unscrupulous dealer here in town did do an unauthorized credit check. I found out when we applied for a mortgage and were asked if we purchased a car from the sleazy dealer.
Anyway, I love you guys. You are all so helpful. (wipes eyes)
You're kidding right? If they replaced the transmission twice and there are no recurring problems then there is no lemon law case. Lemon Laws come to play when the manufacturer cannot fix the problem. Plus, even if one was to start the process now the car would be ready to turn in by the time it was resolved.
No, I'm certainly not kidding, and with respect, I suggest that you review the Magnusson-Moss Warrtanty Improvement Act, sections 1954, 1955, and 1956.
Just because a car may be fixed for the time being has no bearing on whether it qualifies as a "lemon" or falls under the Mag-Moss statutes.
I'm not a lawyer, but I play a court automotive expert on TV...
I did check the lemon laws in my state (Ohio) and the problem had to be unresolved within 18 months. The transmission issues were over a 2.5 year period. The brake rotors had to be replaced twice during that period also. I think I got the one off the Marysville, OH assembly plant that they were testing the Lemon Law with. :-)
I did call AHFC after the second trans went out and they politely told me to get screwed. Basically said that since the *issues* didn't happen within the 18 month window and the dealer would resolve it with a *rebuilt* trans, there was nothing to be done.
Actually, the car seems to have much better pick up now. ;-)
However, I was just in last Monday to get the oil changed. It takes an hour and a half at the dealer to get it done. While there had the tire rotated, etc. The standard 23,000 mile *work*. All for $90.00 plus.
I get a letter on Wednesday, dated Monday, stating they need my car. It has a problem in the trans. They need to put something in the transmission, that Honda ordered, to keep it in warranty, would I mind calling for an appointment? It will only take an hour or two. (WTF?)
I was just there. I was there while they were typing the friggin letter. The service people had to know about the letter. The service manager signed it, for God's sakes!
I called and said I would leave it only if they give me a loaner. They agreed only after 20 minutes back and forth on the phone.
When my trans went out the last time, I got an Enterprise rental...it ended up being a Dodge Ram, Heavy Duty Pick Up, 4 Door. It cost $45.00 just to fill it up. They had my car for 3 weeks. That was one expensive truck. I couldn't wait for my Lemon...
At least they will have to give me a 2003 TL or RL. I hope. My appointment is on Friday.
I'm not a lawyer, but I play a court automotive expert on TV...
Now I know you're kidding. Ohio lemon law states: "3 repair attempts for same defect. 8 total repair attempts, 1 attempt to repair condition likely to cause death or serious bodily injury, or out of service 30 or more calendar days" Coverage period: "1 year or 18,000 miles, whichever occurs first".
Although we had no information that qualified it for lemon law, we indeed had information that disqualified it. Two repairs in 4 years.
Plus, I've been through the lemon law process with a leased vehicle. The arbitrators are less than sympathetic and around 9 months later you may get a small token check.
overrides and outranks most state lemon laws. In fact, about 80% the cases I look at don't fall under the state's lemon law, but Mag-Moss applies, still awarding full repurchases or fairly large compensation.
"Now I know you're kidding"
No, I'm not kidding - that's what I do for a living - check my profile, feel free to drop an e-mail.
All I know is when I read the Mag-Moss and the State laws "3" is the magic number of tries. The common Mag-Moss catch phrase being "Three strikes and you're out".
I don't doubt that you can argue anything. My point was, in this case, we not only didn't have enough information to claim "lemon-law" but the fact that there were only two attempts (that seem to have worked) and that he's 5 months away from turn in would make it highly unlikely to come of anything.
legend passed on by people who don't understand these statutes - the fact is, the word "reasonable number of repair attempts" is the key - think about it - how many times, within "reason", should a transmission need to be replaced in a fairly new Acura? I say none. None is reasonable, and "none" is my opinion, and my opinion has locked in verdicts for the plaintiffs 187 times in actual court appearances - those 187 don't count the other 5,011 cases I've been involved with that didn't get into a courtroom...
The fact is, under Mag-Moss, and in some cases, more importantly, the Uniform Commercial Code, there's an "Implied Warranty of Merchantibility" - the car shouldn't have broken AT ALL. Reasonable? Yes, I think so.
I think someone should be able to buy a new Acura and not worry about replacing the transmission within the first 150,000 miles. In fact, any owner of any new car should be able to have that peace of mind. I think that is a reasonable thought, and certainly the reasonable attitude a new car owner should have after reading most manufacturer's advertisements and warranty claims.
Ok, I happen to disagree with what you deem "unreasonable" and worth litigation. As I read the act(as a consumer who purchases product that is marked up to cover unreasonable litigation) something going wrong is not, in itself, a Mag-Moss issue. In fact, the act itself was meant to protect consumers from warranty issues, not from problems themselves:
"The Magnuson-Moss Warranty Act is the federal law that governs consumer product warranties. Passed by Congress in 1975, the Act requires manufacturers and sellers of consumer products to provide consumers with detailed information about warranty coverage. In addition, it affects both the rights of consumers and the obligations of warrantors under written warranties.
To understand the Act, it is useful to be aware of Congress’ intentions in passing it. First, Congress wanted to ensure that consumers could get complete information about warranty terms and conditions. By providing consumers with a way of learning what warranty coverage is offered on a product before they buy, the Act gives consumers a way to know what to expect if something goes wrong, and thus helps to increase customer satisfaction.
Second, Congress wanted to ensure that consumers could compare warranty coverage before buying. By comparing, consumers can choose a product with the best combination of price, features, and warranty coverage to meet their individual needs.
Third, Congress intended to promote competition on the basis of warranty coverage. By assuring that consumers can get warranty information, the Act encourages sales promotion on the basis of warranty coverage and competition among companies to meet consumer preferences through various levels of warranty coverage.
Finally, Congress wanted to strengthen existing incentives for companies to perform their warranty obligations in a timely and thorough manner and to resolve any disputes with a minimum of delay and expense to consumers. Thus, the Act makes it easier for consumers to pursue a remedy for breach of warranty in the courts, but it also creates a framework for companies to set up procedures for resolving disputes inexpensively and informally, without litigation.
in the Uniform Commercial Code - Implied Warranty of Merchantibility - it shouldn't have broken - period.
I'm certainly not going to debate with you over what cases should be litigated or not - first, that's not my decision, I'm not a lawyer, secondly, I think that 98% of the personal injury cases could be thrown out if our court system wasn't so overloaded and the judges had more time to look at the cases.
There's always three sides to every argument - I side with consumers and supporting my family.
There you have it. I agree nothing should break also. I may have my lawyer call you next time my windshield wiper blades deteriorate prematurely. That's not only a pain but could be life threatening too!
Comments
1. Most states don't tax you on the trade in allowance. so if your car is worth 10K and the sales tax is 6% your really getting $10K plus $600 in sales tax savings. If you sell your car outright you lose that savings so you need to sell it for $10,600 just to break even.
2. If your trade is something a dealer is going to sell on his lot, it gives you more room to haggle...but if it's a wholesale car, you might be better off selling it yourself.
If you only have that much equity I would sell it outright before trading it in.
Purchasing 2004 Snazzmobile XLT LXi: 25000
Trading 00 Blahmobile base: -10000
(worth 10000 on trade, owes 15000, who cares? Dealer is still giving him 10000)
Negotiated discount: -3000
Final purchase price: 12000
Add tax: (5.5% in most of WI): +660
Add title and tag (if not transferred): + 63
Subtract rebate: -1000
Add Amount owed on current loan +15000
Final OTD: 26723
No matter how you slice it, as was pointed out, in this example, the buyer would need to get 10661 from Carmax (or anyone else) to offset the inherent pricing advantage of trading.
I would post your vehicle info in Real World Trade-In Values. Over there, Terry will be able to give you a reasonably accurate idea of what to expect from the dealer.
Armed with this info and what you expect to get the new vehicle down to (after you negotiate the price and rebates, etc), only YOU can decide how cash to throw in the deal, how much to finance, etc. If you have top-end credit, if get decent rate on the car loan, there isn't much difference between paying 4% on the borrowed 3K and giving up the 1% you're making in a savings account with the 3K sitting there. Personally, I would finance it, telling myself in 3 or 4 years, I'll still be paying 4% on the loan, but I'll probably be making more with that cash parked somewhere. But, it's only something you can decide.
As for trading vs selling to Carmax. See my example above. Find out what the dealer will give you for it and only sell it to Carmax if they give you (Dealer's offer + sales tax in your area). If your state doesn't allow the trade-in to reduce the taxable amount, then you just get as much as you can from whoever. But, if your state does what I showed in the example, DO NOT discount the value of the sales tax reduction. The dealer isn't likely in the business just to screw you. Your vehicle is worth what it's worth to the person buying it, no matter what KBB or Edmunds says. (Which is why you should go to Terry first).
BTW, not a dealer, not a salesperson, just a guy looking to give advice seasoned by what I've learned here. And finally, HAVE FUN! Getting a new vehicle should be exciting and fun, so don't go into it as though it's an adversarial battle.
Purchase price: $25,000
Trade In:
Trade in value: 10,000
Amount owed on trade in: -7,500
Net Trade In: -2,500
Total Purchase Price: $22,500
Dealer Doc Fee: 99
Tax (on TPP & DF @ 5.5) 1,242.94
Tag & Title 63
Total Owed on Purchase $23,904.94 (OTD)
Customer Rebate -1,000
Customer Cash ??
New Loan ??
Total Due (Total Owed-rebate-loan)
p.s. dont forget. if you get rid of the titan early, it looks bad on me too...lol.
Good thing they make light travel trailers for SUV's and light duty pickups. We have 2 that we like, one has a dry tongue weight of 440 lbs and a GVWR of 6000 and the other has a dry tongue weight of 494 lbs and a GVWR of 6200 lbs. With either one of them we would still have to watch our loaded tongue weight like a hawk. Plus put on an equilizer hitch and anti-sway bars.
That is honestly the only thing I can be a little miffed about. The Ford F-150 has a GVWR of 7200 lbs so opens up a little more tongue weight.
The Titan is a great truck, but the 9300 lb towing capacity is a little deceiving since that's based on a stripped down truck, a 150 lb driver, and nothing else in the truck to achieve max tongue weight.
Good thing we bought it for the 90% of time we aren't towing, its a really nice truck for that. Towing we just have to be careful and make allowances, just like we would with any 1/2 ton truck.
The reason it works this way is trade-in is trade-in. The state doesn't care what you have to do to pay who you owe. All they know is in the example, you are buying the car for (25000-10000). The purchase price is 15000, that's what you need to come up with. How you payoff the car is irrelevant (again, at least here in WI).
I just pulled a contract from last car that I have in a file here at work. Here's what it looks like (it's a standard WI Motor Vehicle Purchase Contract):
1. Dealer Retail Price: 15050.00
2. Discount: 1794.00
3. Cash Price (1-2): 13256.00
4a. Owned Trade-In Allowance: 2500.00
4b. Positive Leased TIA
4c. Negative Leased TIA
5. Trade Difference (3-4a-4b+4c): 10756.00
6. Other: 0
7. Service Contract: 0
8. Subtotal (5+6+7): 10756.00
9. 5% Sales Tax on Subtotal: 537.80
10. 0.5% County Sales Tax on Sub: 53.78
11. 0.1% Brewers Stadium Tax (n/a):
12. Luxury Tax
13. Registration, Title, Fees on MV11: 42.50
14. Vehicle Warranty or Serv Contract: 0
15. Other 0
16. Balance Due to ________ on Trade: 0 (my loan was outside dealer--had I financed with them, this where the amount I owed on the trade would be)
17. Subtotal (8+9+10+11+12+12+14+15+16): 11390.08
18. Less Cash Down Payment on Order: 500.00
19. Mfr's Rebate: __Cash Back x Assigned:1500.00
20. Subtotal: 9390.08
21. Less Additional Cash Due: 0
22. Due on Delivery or Bal to Finance: 9390.08
Thus I take the #22 amt and add it to what I owed on the previous loan.
Cue talk radio - Long time reader, first time poster.
I know I'm replying to a three week old message, but...
Went to the Buz Post website out of curiosity. Guess what vehicles they now sell? That's right, Hyundai and Kia! Are there CSI scores better, are Hyundai and Kia desperate? Who knows.
Jason
I have attempted to find that website again, but I can't. I HAVE managed to find many of the same wrong websites I found previously.
Do any of you car dealers or car afficianados know of such a website?
Jason
I might know the answer to your question, but you have a very funny way of asking.
And by the way - I worked at Buz Post in 1994 - ten years ago - I would hope that something had changed by now!
I went to autonews.com, autoweek.com, and wardsauto.com. Since they all have "auto" in the website, I was having a hard time remembering exactly where to go.
The website wasn't in my favorites and didn't show up on the 'recently visited' list in Opera. I had a production report .pdf from Ward's in my download directory, but that info is for North American production only.
Thanks again
Jason
I'll just say this: if you feel justified in repeatedly criticizing the grammar of others, don't get bent out of shape when others do it to you.
Jason
(Dang, ended a sentence with a preposition!)
Now, if you have something to dicuss that relates to the car business, I'll be glad to debate or discuss with you - otherwise, you'll have to talk to yourself.
fizintago
yaalll
mondownheeeer
Funny tho......The only southern I speak now is
Maam and Sir ! LOL !!!!!!!!!!
Visiting home always brings shock - words like "upare" (up there), "ait" (alright) and others coming from the mouths of friends and relatives...
I've pretty much abandoned any slang or cool phrases, like "nuttier than a fruitcake", "happier than a pig in slop", or "stronger than three acres of green onions", unless the phrases add color to a formal situation - these common sense phrases/analogies go over big when I'm testifying in court in PA or New Jersey...
"Just checked WI law. Yes, you are right."
Great. Happy to see that after indicating I LIVE in WI and posted an actual WI sales contract, you could confirm I was right. Anyway...
"Does anyone see how that doesn't make any sense at all?"
Honestly, only two situations would make sense to me. 1) The way it's done now. The auto sales business is wacky to begin with, so I can see what it gets special treatment. But, look at it this way (and it's what I've been saying all along). You buy x for 20000, trade in something worth 10000, the state looks at the increased value to you as 10000. If bought a 20000 dollar car with no trade-in, to the state you're walking out with increassd value of 20000. The amount owed on the vehicle is totally irrelevant. I simply can't see how it should factor in the calculation.
"In that scenario you paid tax on $5,000 less than if you would have if you would have just sold the car yourself and paid in cash."
Uh, no. I paid tax on $2500 less than I would have if I paid cash. I think you misread the number. The trade-in was valued at $2500, so I saved 5.5% of $2500.
"If you paid cash once for a car, it would seem in WI, and then traded every year you could be purchasing 2 or 3 hundred thousand dollars of product but only paying taxes on the first product and then depreciation in value for all of the rest."
This is where you really, really lost me. At first I didn't have a clue what you were talking about. Now, I think I figured out your point, but it doesn't make sense. Look at an example (totally hypothetical numbers). You keep mentioning the "paid in cash" thing. Do you mean bought Car 1 with no trade? Or bought without a loan? If you mean the latter, again, it has no bearing on the calculation.
Anwyay, my example:
Car 1 purchased for $20000, no trade-in. Pay tax on $20000.
Car 2 purchased for $22000, trade in Car 1 for $12000. Pay tax on $10000. (Makes sense, since the "gain valued", so to speak is $10000).
Car 3 purchased for $25000, car 2 traded for $12000, pay tax on $13000.
In any scenario, regardless of if I owe money on the car, I always pay tax on the difference, the gain I received. It makes sense to me.
As I said, the only other viable alternative is not allowing the trade value to be deducted from the taxed amount. The state, however, has decided, from a public policy standpoint, that you are trading in something of value and should pay tax on what you get back. It is fiscally sound, because you have to pay tax on every car sales transaction. I like to relate a story of my own to describe how the state never misses a chance to tax a car sale.
I buy the car described in the contract above. A very good friend uses a Chrysler green sheet to buy the car. Chrysler requires the car to be titled in his name only. The loan for the car is in my name and he is a co-signer. The lender never complains about it being in his name only, probably because WI is a title-holding state (the owner physically has the title, regardless of whether there is a lien). I refinance the loan to one in my name only and since the car technically didn't change ownership and I didn't want to pay the tax, I simply added my name to the title and left my friend's name on it. Didn't work. They picked up on it and charged me tax on 50% of the refinanced amount (that's how they determined value and that I gain 50% of that by adding my name--had I put it in my name only, I would have owed 100% of the tax on the refi'd amount). I thoroughly explained the situation to the state, but to them, it was a transfer of ownership and thus, it needed to be taxed, when in "reality", there was not one thing different after the re-titling than before. The state charges tax on the transfer of ownership to ANYONE, other than a spouse. I sell my car to my kid, tax is owed on the value. Good luck telling them you sold it for $1 or for nothing "cause he's my kid". The state will use a valuation service, set a value on the car and charge tax on that, if they feel it's out of line.
Thus, if I sold my 01 Pontiac Sunfire for $3000 privtely (less than it's probably worth), the state would let it slide, figuring I had to dump it. But, if I said I sold it for $100, even with proof that I did, they would recalculate value and tax.
The states that have trade-in credit on the sales tax make it sound like a big consumer benefit, but it is mostly for the car dealers. They can pay $2K less for the car than you are willing to pay and the state subsidizes the deal. If it were really consumer oriented, every time you sold a car that was registered in-state, you would get a state tax credit that could be used to offset any deal on 30 days either side of the sale.
regards,
kyfdx
Edmunds Price Checker
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A registered dealer/retailer simply collects the tax from us the consumers and remits it to NY state each qtr.
A dealer pays NO sales tax outta their pocket when they get a car .
IMO....There should be no sales tax on a used car. The full tax was paid when it was new ! <end of dream.....LOL>
I like the idea of a sales tax credit, but restricting it only to people that buy another car from a licensed dealer seems unfair.
regards,
kyfdx
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I suspect this is the only TRUE reason for this provision. It makes it much harder to avoid tax on any car purchase since the dealer isn't likely to be as willing to "lie" about the sales price. The only problem with the sales tax is that it's transactional--it's designed to tax transactions, not value. I mean, technically, if I sold my big-screen TV to my neighbor, he is supposed to pay sales tax on that to the state. You can guess how often that occurs.
Whether it's fair enough I can't say .. but it's sure better than having states with no tax savings on trades, that stinks ... more and more states are going to the "Nada" value deal, which means if you sell your vehicle to your best "friend" or your nephew for $3,000 and the book "shows" $6,000 then thats what the tax is based on and they DO enforce it. 8/9 months later a little letter comes by the house and says: You Owe xxx .. the problem is, depending on the vehicle and the options, the hi-miler base vehicles get lumped in "about" the same tax amount ... Ooh, now thats fair .l.o.l...
Terry.
"Joe's Bait Shop and License Plate Express"
On new cars, it is 6% sales tax on 90% of the MSRP. (or 5.4% of MSRP), with no trade-in credit.
However, even though this discourages frequent trading, it at least gives you a chance to buy a car from a private party at just a little more than they would get from trading it in, since there is no tax benefit. As I said before, trying to buy from a private party in a "tax-credit" state, means you have to beat the dealer by a couple thousand just for the seller to break even.
regards,
kyfdx
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It also has some paint on the front bumper where it *gently* tapped the garage one day. (Oops)
I took it to the paintless dent people and got two repair estimates, as well as a body shop. The body shop referred me to the paintless people; they said it was totally paintless repair, they wouldn't take my money.
My one estimate is for $540.00 for pulling out the dents and rubbing out the paint.
The second estimate is for $1500.00 for pulling the dents and repainting the areas. This *Magic* dent place felt they just couldn't do the job properly (and in good conscience) without repainting. (I must have worn my Stupid sticker on my forehead)
Anyway, my lease agreement says
"the leasee is responsible for damage from any single event that would cost $500. Total below $500. AHFC will waive up to $1500 of excess wear and use for the total of these single events."
"A event is a single occurrence that results in damage to the vehicle. An event may result in damage to multiple areas of the vehicle (as in front and back, or both sides) but would be considered a single event for purposes of this addendum."
I don't know if I should get my car repaired or have the vehicle inspector out to look at it and debate it with him/her.
My car has to be turned in by December 1.
BTW, this Acura is on it's 3 transmission. It has been replaced twice at the dealership. The first time with 1400 miles on it and the last time 2 months ago, with 22,000 miles on it.
Any ideas or advice on how to handle this? I have leased every other auto I have had and never worried about minor dings. I have had GM and Fords. I did the same bumper routine with my last car and the Ford people didn't blink. They looked at it and had me sign and walk away. The bumper was scratched through to the plastic. This (On the Acura) can/will be buffed out.
I have read and heard horror stories about AFHC however and now I am really paranoid.
By the way, you might be able to remove the garage paint transfer with some Meguiar's Cleaner Wax - the stuff works great - go over the area with some Wax Shop Super Glaze afterwards - I've removed LOTS of small paint transfers with those two products - I used to have a detail business.
I thought of trying an auto parts store for something like that and getting it detailed before the inspector comes out. If I can get the paint off the bumper and even try one of those dent doctor things myself, I figure why not?
I just wasn't sure if I should have the inspector see it with the dents or get it fixed.
I have had it serviced faithfully every 3500 miles (the light on the dash goes on and it won't go off til you take it in) and only at the dealer.
I have read pages and pages of Acura and Honda stuff here and there are some hair raising stories of lease turn-ins.
I may go get one more estimate to try to even the score between the two. That way if the inspector pushes, I'll be covered.
BTW, I love all these forums. I work from home and I have been avidly reading *everything*.
I have learned so much, I cannot believe it.
I went and test drove some cars this past week and took a photocopy of my license to give them. On it I wrote "No credit checks allowed Return to ___" The dealers were really surprised. They asked where I learned that *trick*. I said on Edmunds.com of course.
They were not happy, however, they photocopied that and did return it. Then told me it was illegal to do an unauthorized credit check. Which I knew, however, last time I car shopped, 3 years ago, I didn't know that and an unscrupulous dealer here in town did do an unauthorized credit check. I found out when we applied for a mortgage and were asked if we purchased a car from the sleazy dealer.
Anyway, I love you guys. You are all so helpful. (wipes eyes)
Just because a car may be fixed for the time being has no bearing on whether it qualifies as a "lemon" or falls under the Mag-Moss statutes.
I'm not a lawyer, but I play a court automotive expert on TV...
I did call AHFC after the second trans went out and they politely told me to get screwed. Basically said that since the *issues* didn't happen within the 18 month window and the dealer would resolve it with a *rebuilt* trans, there was nothing to be done.
Actually, the car seems to have much better pick up now. ;-)
However, I was just in last Monday to get the oil changed. It takes an hour and a half at the dealer to get it done. While there had the tire rotated, etc. The standard 23,000 mile *work*. All for $90.00 plus.
I get a letter on Wednesday, dated Monday, stating they need my car. It has a problem in the trans. They need to put something in the transmission, that Honda ordered, to keep it in warranty, would I mind calling for an appointment? It will only take an hour or two. (WTF?)
I was just there. I was there while they were typing the friggin letter. The service people had to know about the letter. The service manager signed it, for God's sakes!
I called and said I would leave it only if they give me a loaner. They agreed only after 20 minutes back and forth on the phone.
When my trans went out the last time, I got an Enterprise rental...it ended up being a Dodge Ram, Heavy Duty Pick Up, 4 Door. It cost $45.00 just to fill it up. They had my car for 3 weeks. That was one expensive truck. I couldn't wait for my Lemon...
At least they will have to give me a 2003 TL or RL. I hope. My appointment is on Friday.
Now I know you're kidding. Ohio lemon law states: "3 repair attempts for same defect. 8 total repair attempts, 1 attempt to repair condition likely to cause death or serious bodily injury, or out of service 30 or more calendar days" Coverage period: "1 year or 18,000 miles, whichever occurs first".
Although we had no information that qualified it for lemon law, we indeed had information that disqualified it. Two repairs in 4 years.
Plus, I've been through the lemon law process with a leased vehicle. The arbitrators are less than sympathetic and around 9 months later you may get a small token check.
"Now I know you're kidding"
No, I'm not kidding - that's what I do for a living - check my profile, feel free to drop an e-mail.
I don't doubt that you can argue anything. My point was, in this case, we not only didn't have enough information to claim "lemon-law" but the fact that there were only two attempts (that seem to have worked) and that he's 5 months away from turn in would make it highly unlikely to come of anything.
The fact is, under Mag-Moss, and in some cases, more importantly, the Uniform Commercial Code, there's an "Implied Warranty of Merchantibility" - the car shouldn't have broken AT ALL. Reasonable? Yes, I think so.
I think someone should be able to buy a new Acura and not worry about replacing the transmission within the first 150,000 miles. In fact, any owner of any new car should be able to have that peace of mind. I think that is a reasonable thought, and certainly the reasonable attitude a new car owner should have after reading most manufacturer's advertisements and warranty claims.
Your mileage may vary.
"The Magnuson-Moss Warranty Act is the federal law that governs consumer product warranties. Passed by Congress in 1975, the Act requires manufacturers and sellers of consumer products to provide consumers with detailed information about warranty coverage. In addition, it affects both the rights of consumers and the obligations of warrantors under written warranties.
To understand the Act, it is useful to be aware of Congress’ intentions in passing it. First, Congress wanted to ensure that consumers could get complete information about warranty terms and conditions. By providing consumers with a way of learning what warranty coverage is offered on a product before they buy, the Act gives consumers a way to know what to expect if something goes wrong, and thus helps to increase customer satisfaction.
Second, Congress wanted to ensure that consumers could compare warranty coverage before buying. By comparing, consumers can choose a product with the best combination of price, features, and warranty coverage to meet their individual needs.
Third, Congress intended to promote competition on the basis of warranty coverage. By assuring that consumers can get warranty information, the Act encourages sales promotion on the basis of warranty coverage and competition among companies to meet consumer preferences through various levels of warranty coverage.
Finally, Congress wanted to strengthen existing incentives for companies to perform their warranty obligations in a timely and thorough manner and to resolve any disputes with a minimum of delay and expense to consumers. Thus, the Act makes it easier for consumers to pursue a remedy for breach of warranty in the courts, but it also creates a framework for companies to set up procedures for resolving disputes inexpensively and informally, without litigation.
http://autopedia.com/html/HotLinks_LemonMM3.html
The fact that unscrupulous people litigate just because there has been a problem doesn't mean that the spirit of the act is being used.
I'll just agree to disagree with litigation over a problem that occurs once or twice.
I'm certainly not going to debate with you over what cases should be litigated or not - first, that's not my decision, I'm not a lawyer, secondly, I think that 98% of the personal injury cases could be thrown out if our court system wasn't so overloaded and the judges had more time to look at the cases.
There's always three sides to every argument - I side with consumers and supporting my family.
Sorry, couldn't resist.